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10 Simple Ways You Can Grow Your Net Worth

·6 min read
StudioThreeDots / Getty Images
StudioThreeDots / Getty Images

The United States is one of the wealthiest nations in the world, with an average net worth per adult American of $505,421, according to the 2021 Global Wealth Report from Credit Suisse. However, this mathematical average is heavily skewed towards the super-wealthy. In terms of median net worth, the average American sits at just $79,274. If you’re looking to climb from the median net worth to the average net worth or beyond, you might need to make some changes to your financial life. The good news is that a few simple steps can help put you on your way.

Follow Along: 31 Days of Living Richer
Discover: How To Calculate Your Net Worth

Last updated: July 19, 2021

pixelfit / Getty Images
pixelfit / Getty Images

Stop Impulse Spending

If you want to keep more of what you earn, one important step is to turn off the spigot of needless spending. Impulse shopping is a way of life in America, and retailers are quite clever at distracting shoppers with bright, shiny objects when they’re out shopping for something else. Even if you think you have a lot of willpower, you might be surprised to see how much you spend on frivolous purchases over the course of the year. If you need proof, commit to writing down any time you spend money on an impulse buy that you don’t really need. For most people, seeing this figure in black and white is enough to convince them that they are overspending.

Check Out: 50 Purchases Buyers Almost Always Regret

skynesher / Getty Images
skynesher / Getty Images

Trim Excess Monthly Expenses

In addition to impulse expenses, there’s room in most people’s budgets to cut out recurring monthly costs as well. This doesn’t mean you have to give up the occasional meal out or seeing a movie at your local cineplex, but it does mean you should eliminate things that you don’t need. For example, many people have subscriptions to magazines they no longer need or subscribe to cable channels they no longer watch. You might also consider trimming down from premium versions of channels to ad-supported once, which might be cheaper or even free.

Explore: Cut the Cable Cord in 2021 With 3 Completely Free TV Apps

kate_sept2004 / Getty Images
kate_sept2004 / Getty Images

Ask for a Raise

Cutting expenses is a step in the right direction towards increasing your net worth, but boosting the income side of the equation can be an even easier way to reach your goal. Currently, there’s a labor shortage in America, as businesses are hiring but workers are only trickling back to the workforce. In this type of environment, it might be easier to ask for a raise, as employers are already conditioned to the fact that premium workers command higher salaries.

See: How Often Should You Renegotiate Your Salary?

LPETTET / iStock.com
LPETTET / iStock.com

Get a Side Gig

If your employer won’t budge on your salary and you don’t want to leave your job, consider getting a side gig. It’s easier than ever to market your services on various freelance websites, and home-based services are increasingly in demand. One quick way to boost your net worth is to divert all of your side gig income to your savings, as it is essentially “extra” income above and beyond what you’re already living on. The same idea applies to other unexpected or “windfall” sums, such as tax refunds or inheritances.

Discover: 22 Side Gigs That Can Make You Richer Than a Full-Time Job

Astarot / Getty Images/iStockphoto
Astarot / Getty Images/iStockphoto

Pay Off Your Credit Cards

One of the quickest ways to decimate your net worth is to carry outstanding credit card balances. With interest rates on some cards exceeding 20%, not only will your existing debt drag down your net worth, but it will also compound rapidly, doubling in as little as 3 or 4 years. The bottom line is that if you want to increase your net worth, you can’t carry outstanding high-interest debt.

Find Out: 16 Key Signs That You Will Always Be In Debt

jhorrocks / Getty Images
jhorrocks / Getty Images

Pay Off Your Mortgage

One way to give your net worth a boost is to raise the equity in your home by paying off your mortgage instead of simply spending that money. There are different schools of thought on whether it makes sense to pay off a mortgage as rapidly as possible, as it is typically low-interest debt. However, paying your mortgage down will definitely increase your monthly cash flow and raise your home equity value.

Learn: Tips To Get Your Mortgage Payments as Low as Possible

monkeybusinessimages / iStock.com
monkeybusinessimages / iStock.com

Leverage Your Mortgage

A more advanced strategy to increase your net worth involves leveraging your home and using that money to purchase additional rental properties. The idea is that if you can make smart purchases, the rental income you generate will eventually pay off not only the mortgages on your new rental properties, but also the mortgage on your main residence. This is a great way to increase your net worth -- as your properties appreciate in value -- while others make your mortgage payments for you. The current low interest-rate environment is conducive to this type of strategy, but be sure to discuss it with your financial planner, tax advisor and real estate professional to see if it makes sense for you.

Read: 8 Insider Tips to Get Rich in Real Estate

Petar Chernaev / Getty Images
Petar Chernaev / Getty Images

Buy Investments, Not Depreciating Assets

One way to increase your net worth is to reframe how you think about your spending. When you use your money to buy depreciating assets like automobiles, you’re creating a drain on your net worth. If you instead channel that money towards assets that go up in value, such as stocks, real estate and other investments, your net worth can increase on its own over time. There are no guarantees in investing, but owning assets that are certain to depreciate is a losing strategy.

Check Out: Investing for Beginners: What First-Time Investors Need To Know

nito100 / Getty Images/iStockphoto
nito100 / Getty Images/iStockphoto

Maximize Your Retirement Plan Contributions

Retirement plans come in many types, but they’re all great ways to build wealth. In addition to enjoying tax-deferred growth of your investments -- or tax-free, in the case of Roth accounts -- you may also get a tax deduction for your contributions. The maximum contribution to a 401(k) plan in 2021 is $19,500, or $26,000 if you’re age 50 or older. Even IRA plans allow contributions of up to $6,000, or $7,000 for those age 50 or older. Maximizing your contributions to these plans and compounding your earnings over time can result in huge gains to your net worth by the time you retire.

Learn: 27 Best Strategies To Get the Most Out of Your 401(k)

nortonrsx / Getty Images/iStockphoto
nortonrsx / Getty Images/iStockphoto

Keep Your Idle Cash in a High-Yield Savings Account

To maximize your net worth, you should ensure that every dollar is working for you as hard as it can. This means that even your idle cash accounts, such as your emergency fund, should be invested in a high-yield savings account. These types of accounts are FDIC-insured but typically pay a much higher interest rate than you can earn on traditional savings accounts or certificates of deposit. For example, according to the St. Louis Fed, the average savings account in America currently pays just 0.06 percent. A high-yield savings account, on the other hand, might pay as much as 0.50% or more.

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This article originally appeared on GOBankingRates.com: 10 Simple Ways You Can Grow Your Net Worth